Record Year Continues On Wall Street

posted by KTRH’s Corey Olson
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3 years ago

In what is becoming a regular occurrence, the Dow Jones Industrial average hit another record high this week, reaching 15,783. It's almost becoming ho-hum news in what is shaping up to be perhaps the most bullish year ever for the stock market. "The Dow has hit 35 different record highs this year, the first coming in March and now the most recent occurring this week," says Steve Russolillo, markets reporter from the Wall Street Journal. He tells KTRH that two main factors are keeping investors humming these days. "Stocks are moving higher on the fact that both the economy looks like it's getting a little bit better, and the Fed is still stimulating the economy," says Russolillo.

While the overall economy is trending upward, with the most recent reports on unemployment and economic growth both showing modest improvement, by far the biggest factor in the 2013 Wall Street surge has been the Federal Reserve's stimulus action. "The Fed has been keeping its accommodative policies in place for quite some time now," says Russollilo. "That's of course referring to the $85 billion a month bond-buying program that the Fed has been implementing for more than a year." Russolillo adds that he and other analysts expect the Fed will continue the stimulus program at least through next spring, which could mean the market blowing past a few more record highs in the months ahead.

The biggest concern to market analysts like Russolillo is that soaring stock prices and corporate profits are not translating to a bigger dent in the unemployment rate, which remains at 7.3%. "Yes, corporate profits are growing about 4-5% right now, but revenue growth has been even lower than that," he says. "So the demand is still pretty weak, and with weak demand out there, there's little incentive for companies to hire more." For now, one of the biggest items on investors' radar will be the Christmas shopping season, as that usually portends larger trends in the overall economy.